EUR/CAD extends losses as German business activity shrinks the most in 39 months

EUR/CAD extended losses on Wednesday, further pulling back from recent 1-week high, after Germany’s private sector activity shrank at the sharpest rate since the aftermath of the COVID-19 outbreak in May 2020.

The HCOB Germany Composite Purchasing Managers’ Index plummeted to a reading of 44.7 in August, or much more than expected, from 48.5 in July.

Manufacturing activity contraction deepened to the fastest rate in more than 3 years in August, preliminary data showed, while services sector activity decreased for the first time in 8 months and also the most since November 2022.

In addition, France’s services sector activity contracted more than expected in August to a 2 1/2-year low.

The S&P Global France Services PMI came in at 46.7 in August down from 47.1 in July, while indicating a third successive month of activity contraction.

Meanwhile, Canadian retail sales data for June will be closely watched for clues over consumer spending trend. Retail sales are expected to have stalled in June compared to May, following a 0.2% growth in the prior month.

Retail sales, which exclude automobile sales, are expected to have risen 0.3% month-over-month in June after recording zero growth in May.

The official data will be released at 12:30 GMT.

As of 9:26 GMT on Wednesday EUR/CAD was edging down 0.22% to trade at 1.4662. Earlier this week, the minor Forex pair went up as high as 1.4785. The latter has been the pair’s strongest level since August 11th (1.4802).

Germany’s benchmark 10-year bond yield plunged to its lowest level since August 10th at 2.546%.